Answer:
Total cost= $133,000
Explanation:
Giving the following information:
Greenwood Manufacturing Inc.’s static budget at 8,000 units of production includes $40,000 for direct labor and $48,000 for direct materials. Total fixed costs are $23,000.
<u>In a flexible budget, when production changes, we need to recalculate the cost of production. The costs that vary with production, in this case, are direct labor and direct material.</u>
First, we need to calculate the unitary cost of direct labor and direct material:
Unitary direct labor cost= 40,000/8,000 units= $5 per unit
Unitary direct material cost= 48,000/8,000= $6 per unit
Now, we can determine the total cost:
Total cost= total direct labor + total direct material + fixed costs
Total cost= 5*10,000 + 6*10,000 + 23,000= $133,000
